WELLINGTON NEWS

Hokitika Guardian, 24 May 1929, Page 2

WELLINGTON NEWS

WOULD PRICES OF PRODUCTS. (Special Correspondent.) WELLINGTON, May 22. From the economical point of view New Zealand and Australia rest largely upon the world prices of certain primary. products, such as wool, butter, meat, wheat, etc. Since the war the two countries haVe profited to some extent by the special demand for their services in the matter of assisting to feed and clothe European populations engaged on reconstruction at prices artificially increased by the monetary inflation as well as by other factors. . The void left in the supply of primary products by the failure of such a country as Russia to obtain her full power in this respect must have been of assistance, is the opinion of Mr A. T. Traversi, formerly New Zealand Government actuary. He points out that upon these world prices are built up the values of land and of businesses which in their turn form largely the basis of taxation and public revenues. There is no doubt;, about that, and if world prices of our primary products are maintained at their present level all will be'.well, but we cannot bank on that, indeed it would be superlative simplicity to believe that prices will remain where they stand now. , According to Mr Traversi the fall in world prices during the last few years has been the result of causes still operating, and one can hardly commence to think seriously upon the position of these countries without speculation whether the gradual resumption of the gold standard and other more or less inter-related factors will further the downward trend. Some economists — and among them Professors J. Maynard Kejines and Gustav Cassell, of S we den_express the vie,w that we are witnessing an era of falling prices. Britain has still a good way to go before she attains the gold standard completely, but she is committed to it. No country outside the United States is on a true gold standard and basis. Jn Britain gold is not in circulation and the smallest amount of gold the Bant of England will part with is 400 fine ounces. The gold is held by the < central banks in Europe for fa •il’tating the foreign exchanges and; gold is very difficult t(>. : obtaih ; : for{' jthc •Eufopean central ljfsl>.s, put ;eygry. ounce pf'goljl in cold .as scion as- fdiey become possessed ; of; it.;. !;• . . : • / ; ; t ;t The qiUsijon -is‘ jdf- ■ great' .importance to New .an4;tY{bstralia who depend upo|n ;4hei;i| export;'of primary products and; lafef ; also' 'carrying a. heavy load of : which (apart temporary' i}ps. >a.ad downs) they ar6‘,t;ivc : o(ifdihg; $ ;to’ i economists, bound to:;dp;fs'4;iour. internal . .values and revenues;-. tihd ,the means, of scry? ing and repaying our debts, will diminish while the debts themselves will not automatically become smaller in the same way. With respect to the position of the Dominion, Mr Traversi says:

“At present New Zealand appears to be passing through a minor crisis. Money, which has a wave-lik'e habit of flowing out; of the sea of business into the cave bl'. security and back again, seems just .now-as 'far as New Zealand is concerHbfjyHo-bb' in • the cave in the guise of bank deposits, investments in Government stock, etc., so that there appears to be a plethora of money out of business. This is a sign of some present stagnation, but also a premonition of coming activity; and with the good balance of exports over imports the position here seems very sound.” But the world has not entirely recovered from the war, and stability of world prices is not to lie. expected. Mr Traversi is of the opinion that the impression one might legitimately form is that New Zealand is in an excellent position financially, with plenty of money available for the coming lecovery; while New South Wales is enjoying a steady prosperity with perhaps a relatively smaller, or at any rate dearer supply of available capital. Both countries would be inclined to stagger a little in tbe not impossible case of the conjunction of bad seasons with low world prices; and in this connection is not so entirely comfortable as before the war, when general financial conditions were uncomplicated by the existing disturbances in national and monetary matters. A good many people are taking a long view oif the outlook and are acting in accordance therewith, for they hold a well-grounded belief that world prices will decline slowly perhaps, but inevitably, and it is possible that any year may ! see adverse climatic conditions curtailing the‘Volume of our exportable products. The attitude of Labour in relation to these problems is important, but that matter is tinged with politics and must be dealt with by politicians.